International topics
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International Cross-Listing and the Bonding Hypothesis
The authors describe a new view of cross-listing that links the impact on firm valuation to the firm's ability to develop an active secondary market for its shares in the U.S. markets. -
National Saving–Investment Dynamics and International Capital Mobility
The authors analyze the dynamics of national saving–investment relationships to determine the degree of international capital mobility. -
Modélisation « PAC » du secteur extérieur de l'économie américaine
In this paper, the authors use polynomial adjustment cost (PAC) models to analyze and forecast the main components of the U.S. trade sector. -
December 23, 2003
The Comparative Growth of Goods and Services Prices
For several decades, the prices of services have been rising more rapidly than the prices of goods in Canada and the other major industrialized countries. In 2002, this gap between the growth rates of these two components of the consumer price index (CPI) widened considerably, leading researchers to ask if this was the beginning of a trend. Analysis reveals, however, that the gap is based on short-term dynamics and that it appears to be independent of the trend in the development of the overall price level. Evidence also shows that the gap is eventually reabsorbed. The authors examine a number of potential causes for the prices of services to rise faster than those of goods. These include the more rapid pace of productivity growth in the goods sector, the greater openness of goods to foreign trade, and stronger growth in the demand for services. -
December 22, 2003
Current Account Imbalances: Some Key Issues for the Major Industrialized Countries
The resurgence of sizable current account imbalances in the major economies in recent years, particularly the tripling of the U.S. deficit, has led to renewed academic and public discussions about their sustainability. Jacob's main objective is to show that current account balances are simply the outcome of various relative structural and cyclical forces between trading partners. He reviews the factors behind the changes in the current account positions of the three largest industrial economies (the United States, Japan, and the euro area). Two strong determinants shaping the current account balances are the faster increase in U.S. productivity compared with that of other major economies and, more recently, the loosening in the U.S. fiscal stance. Jacob also reviews a range of outside assessments from such sources as the Organisation for Economic Co-operation and Development and the International Monetary Fund, as well as the academic literature, to determine the possible risks to macroeconomic and financial stability. -
December 21, 2003
The Rationale for Cross-Border Listings
Technological progress and the liberalization of capital flows have both contributed to the considerable changes in global equity markets over the past few decades. Yet obstacles to international capital flows still exist, leading to segmentation of markets and creating incentives for corporate managers to adopt financial policies such as international cross-listing. In exploring the costs and benefits of cross-listing, Chouinard and D'Souza find that U.S. exchanges are attracting an increasing share of cross-listed firms. The empirical studies they review suggest that the cost of equity capital declines following a foreign listing as a result of lower transactions costs or an improvement in the quality and quantity of firm-specific information available to investors. As well, informational asymmetries across countries prevent simultaneous price discovery across exchanges. -
Real Exchange Rate Persistence in Dynamic General-Equilibrium Sticky-Price Models: An Analytical Characterization
This paper assesses analytically the ability of dynamic general-equilibrium sticky-price models to generate persistent real exchange rate fluctuations. It develops a tractable general-equilibrium model with Calvo-type price stickiness. -
Nominal Rigidities and Exchange Rate Pass-Through in a Structural Model of a Small Open Economy
The authors analyze exchange rate pass-through in an estimated structural model of a small open economy that incorporates three types of nominal rigidity (wages and the prices of domestically produced and imported goods) and eight different structural shocks. The model is estimated using quarterly data from Canada and the United States. -
Explaining and Forecasting Inflation in Emerging Markets: The Case of Mexico
The authors apply existing inflation models that have worked well in industrialized countries to Mexico, an emerging market that has recently moved to adopt an inflation-targeting framework for monetary policy. They compare the performance of these models with a mark-up model that has been used extensively to analyze inflation in Mexico.